The way to reduce inequality in the capitalist system is to allow companies to
grow and employ more people, Sir Martin Sorrell, the head of WPP, the
world’s largest advertising agency, told delegates at the Downloading Davos
breakfast hosted by The Times this week.

Sir Martin added he was “really annoyed” that he was made to feel apologetic
for his company’s growth and success.

Despite increasing resentment towards a system that continues to reward the
rich while many people suffer from government austerity measures, inequality
was not a dominant theme at the World Economic Forum in Switzerland last
week. This resentment at inequality has already sparked violent action in
Greece and protesters have “occupied” Wall Street and the City of London.

At the Downloading Davos breakfast, Ed Williams, the chief executive of
Edelman UK, asked a panel including senior editors and Sir Martin why
inequality had not been a bigger issue at Davos. Sir Martin said: “People
shy away from it because it is very difficult.”

The WPP boss was speaking a day after Stephen Hester, the RBS chief executive,
had succumbed to intense political pressure and waived his £1 million bonus.

Sir Martin argued that the way to reduce inequality was not to attack
businessmen but to focus on policies that would get economies back to
growth. “I feel really annoyed having to apologise because we are doing
well,” he said. “Why should I apologise for increasing employment when
inequality is decreased as a result?”

The principal topic of conversation in Davos last week was the eurozone
crisis, with most business leaders feeling disaster had been averted but
that the situation was far from resolved.

James Harding, the editor of The Times, told the breakfast: “There was
less pessimism than people had expected, especially in the banking sector.
That was largely due to the actions of the ECB.”

The European Central Bank has recently reversed its policy on raising interest
rates and provided financing facilities for banks.

Tracy Corrigan, editor-in-chief of the Wall Street Journal Europe,
said: “There was a sense of greater optimism but that optimism was more
about moving back from the abyss rather than finding a solution to the
problem.”

However, Sir Martin warned that political leaders still seemed unwilling to
make the hard choices necessary to rebalance the European economy.

The actions needed included raising productivity and reducing real wages in
most periphery countries. “I come away from Davos feeling very negative
about western Europe,” Sir Martin said.

“While we feel better about the short-term outlook, as it seems we will muddle
through, in the long term Europe will not adjust.

“WPP is not willing to add to its headcount in western Europe because
politicians will not do the difficult things to make it right.”

Baroness Ilora Finlay, professor of palliative medicine at Cardiff University,
asked the Downloading Davos panel whether there had been much discussion at
the WEF about the need to tackle unemployment — and youth unemployment in
particular.

Gerard Baker, deputy editor-in-chief of the Wall Street Journal and Dow
Jones, agreed that this was a problem that was becoming entrenched in
economies.

“The US is in danger of importing European-style sclerosis and the long-term
unemployment picture has not improved,” he said.

“I don’t think there is an effective policy response to that. There is a lot
of wishful thinking that as the economy improves, unemployment will be
sorted out.

The situation is very severe among African-Americans below the age of 24,
where the unemployment rate is nearing 50 per cent,” The Downloading Davos
panel also highlighted protectionism and trade as another theme to emerge
from this year’s WEF.

David Wighton, The Times’ chief business commentator, said: “The Doha
trade talks were declared dead this year and it was notable that the Prime
Minister was talking about bilateral agreements at Davos.

“There was lot of gloom about liberalisation of markets and a lot of concern
about protectionism from recent comments made by Obama and Sarkozy.”